Economy in Brief

The French industry gauge from INSEE edged higher, rising to 100.3 in July from 100.0 in June. Despite the increase the standing for the climate gauge is at its 40.4 percentile. That leaves it below 50, the level that marks its median value.

The percentile standings in the table are telling. For production, the personal likely trend is at an anemic 6.9 percentile standing. That response tells us that the likely trend for production in the respondents’ own industry is exceptionally low. Interestingly respondents to this survey – quite different from being in denial- are much more downbeat on their own prospects compared to industry overall where the recent trend is higher on the month at +8.8, up from +2.6 in June. The recent trend also has a standing in its 57th percentile. While industry overall performs solidly, firms are very worried about their own prospects.

External demand is king Orders and demand overall have a 49.4 percentile standing, essentially on top of their historic median. And foreign orders, that improved sharply to -5.7 in July from -15.0 in June, have a 74.5 percentile standing - much stronger than for orders and demand overall. France seems to have a lot of its stimulus and support coming from external demand.

Meanwhile, inventory levels rank high at an 88.3 percentile standing. This is not a good sign. When demand weakens inventories often are ‘the residual’ that firms can’t control. As firms move to cut orders in a weakening environment, there are always lags, goods in shipment, and if sales continue to weaken, inventories will continue to pile up as a result.

Own-prices rose in July while the manufacturing price level response slipped to +4 in July from +7.1 in June. Respondents own likely price level has a 63.6 percentile standing compared to a standing at its 38.1 percentile standing for manufacturing prices. For services inflation forces are much stronger.